Long Term Leases and Property Transfers

Long Term Leases and Property Transfers

In real estate, long-term property lease situations (30–99 years, with options for lease extensions) are typically referred to as ground leases. Ground leases and subsequent property transfers can be especially tricky for several reasons.

The specifics of a ground lease are as follows: A landowner leases a piece of property (with no improvements or excavations made to the land) to a tenant. The tenant is allowed to construct a building of any form on the land during the lease agreement.

Improvements and Depreciation

Normally, during fresh construction on untouched land certain excavation changes must be made to prepare the land for subsequent building. The problem is that when excavation takes place the improvements will cause an increase in the property value.

What happens in these situations?

During the specific terms of the ground lease, any improvements made to the land will be owned outright by the tenant. The improvements will be depreciated from the rent. The improvements will transfer to the property owner at the end of the rental term.

In rare situations, the landowner will require the tenant to remove the improvements made to the land that satisfy the construction requirements.

During ground lease situations, the landlords and tenants can potentially reap the benefits in the occurrence of the former situation. Depending on how much value was accrued during the lease term, both parties stand to profit a substantial amount from these improvements.

No Longer Tax-Free

In the past, these transactions weren’t grounds for taxation. This was recognized as a type of tax-free loophole that existed between property owners and renters. However, this changed in most states around 2014, depending on the specific geographic location.

If you’re a current landowner who takes place in the beneficial interest of a land transfer that takes place after a lease of 30 years or more (specifically targeting ground leases), you’ll have to pay taxes at a rate of 50 cents for every $500 of property value added to the land during the leasing term.

In many locations, not only are you required to pay a tax on the added value but an additional transfer tax for the mere creation of a ground lease. Additionally, the situation becomes more complicated when a mortgage is involved on the part of the tenant to finance the construction of the building.

If you’re a landowner or tenant involved in a ground lease, it’s important to be aware of the laws regarding these taxes in your location. Each state is unique in the figures and specifics surrounding these situations, and being aware is critical for compliance.

Turn to the experienced lawyers here at Bell Shah Law when you have any type of real estate attorney questions. We will put our years of experience to work for you and ensure you and your real estate are properly represented.

5 Reasons to Work with a Real Estate Attorney

5 Reasons to Work with a Real Estate Attorney

Often, people don’t think about hiring an attorney when they are buying or selling real estate, but this could be a big mistake. Attorneys that specialize in real estate can provide you with more benefits than you may realize at first. Let’s look at some of the biggest reasons to work with a real estate attorney in Chicago.

Drafting and Reviewing Contracts and Documents

Buying and selling real estate involves a substantial amount of paperwork and documentation. Some of these papers and contracts can be complex and difficult to understand. Your real estate attorney in Chicago can help you get a full understanding of everything that you have to sign, and they can keep you from making mistakes. Additionally, they can draft various types of documents when they are needed.

Attorneys Could Help Negotiate

Rather than trying to negotiate on your own or having a real estate professional do it, you could opt to have an attorney help with the negotiations. Lawyers negotiate and argue as part of their daily work. They know how to talk to people and have the potential to get you a better deal than you could have if you were trying to do it on your own.

Dealing with Leins and Title Searches

Before closing, a lien and title search needs to take place. This ensures that no one else has a financial claim on the property and that the seller is legally allowed to sell the home. Real estate attorneys can help with the lien and title search. However, one of the best things about working with attorneys is that they can help to resolve any title and lien problems that are found.

Ensure Proper Deed Filing

Deeds are legal documents, and you will want an attorney to examine the deed and make sure it is filed properly. This ensures no mistakes are made with the deed, and it can provide you with some peace of mind.

Preparation of a Closing Document

The attorney can prepare your closing document, which is an account of the financial transactions that occurred during the sales process. This could include things like the amount the buyer paid in earnest money, when they paid, when the escrow account was funded, and then the seller received the final payment, for example.

Now that you have a good understanding of why you should work with a real estate attorney, it’s time to find the right firm for the job. Turn to the experienced lawyers here at Bell Shah Law when you have any type of real estate attorney needs. We will put our experience to work for you and ensure you and your real estate are properly represented.

Starting a Business in the New Year?

Starting a Business in the New Year?

Are you going to be starting up a new business in the coming year? This is a big endeavor, and you’ve likely been planning the launch of your company for a while now. However, as prepared as you might believe yourself to be, you might be forgetting one of the major pieces of the puzzle. If you don’t have an attorney working on your behalf, you might find that you are facing more risk than you should be.

Why Work with an Attorney?

Risk is a constant part of business, and when you choose to work with attorneys who are experienced in the field, they can minimize those potential issues and protect your business assets. Consider some of the many ways that working with a lawyer will help.

From the state, working with an attorney can help ease some of the confusion that comes when starting a business. They can help you understand the various forms of business, from sole proprietorships to partnerships, LLCs, and corporations, and let you know which is best for your business. They can help you get it set up, so you can start doing business.

Attorneys will ensure that your business operates according to federal, state, and local laws. It can often be difficult for new business owners to fully understand all of the various legal requirements involved when it comes to employees, property, etc.

The attorney can write up and review independent contractor agreements, as well as employment contracts. This will ensure that you are doing everything according to the law. They can also create non-compete agreements for your employees, create executive compensation agreements, partnership agreements, and more.

The attorney can review all contracts that come your way and can create contracts that you might need for suppliers, contractors, and more. They will review documents and deals to ensure they are in your best interests.

Find a Quality Attorney

As you can see, choosing to use an attorney for your business rather than going at it on your own makes sense. You can focus on your business rather than all of the legal minutia.

When you are choosing an attorney for your business, think about the type of business you are operating and how an attorney might be helpful. Take the time to speak with an attorney about your business to get a better sense of the various ways they can help make aspects of your business easier to manage.

Step Up Your Real Estate Investment Game with an Attorney

Step Up Your Real Estate Investment Game with an Attorney

Are you a real estate investor, or do you want to get into the field? It has the potential to be a wonderful, lucrative business. However, it’s not something that you want to do on your own. If you want to make the process easier and truly step up your game, consider working with an attorney that knows and understands this business. They can help in a host of ways, whether you have been investing for years or you are new to the field. Let’s look at how they can assist.

Drafting and Reading Contracts

Attorneys know and understand the complexity of contracts of all sorts. They can take care of drafting various contracts that you may need, and they can read contracts that are sent to you, letting you know if there are any potential issues. Along the same lines, the attorney can help with the drafting of leases, ensuring that they are legal and binding. This ensures that you don’t make any mistakes that could end up costing you later. The attorney will review all of the sales and loans documents to make certain they are correct, as well.

If you hate trying to parse all of the paperwork that comes along with real estate investing, working with an attorney will help to make the process easier from start to finish. This means less hassle for you, and it could mean better investments and higher profits.

Negotiations

Attorneys tend to be excellent when it comes to negotiation. With certain types of negotiation that occur with real estate investments, such as handling inspection requests and modifications to the contract, an attorney will be valuable. They will save time and can often ensure you have a better outcome than you would if you were on your own.

Attend Closing

The attorney can attend closing with their clients, or even on behalf of their clients. This can be beneficial if you find that you aren’t able to get to closing for one reason or another.

These are just some of the ways that working with one of these professionals can help. When you choose to work with a real estate attorney, it gives you peace of mind. They can help you navigate through the challenging legal process of buying and selling properties, reducing your risks, and helping to ensure that your investments are properly protected. Take the time to get in touch with a real estate attorney to talk about your investment business today.

Learn What Your Home’s Inspection Must Cover

Learn What Your Home’s Inspection Must Cover

A home inspection is often required before you close on your new home. When you are getting ready to buy or sell a home, an inspection of the property’s major systems is essential to help determine its overall condition.

The Home Inspection Report

Electrical system

A safe electrical installation depends not only on correct wiring but also adequate over-current protection by the circuit breakers or fuse box. These devices prevent wires from overheating due to excessive current flow caused by short circuits or overloads. Whenever possible use breakers or fuses instead of extension cords, which can overheat and result in fire.

House Lifting Devices

These devices are used to lift homes for various reasons, including the construction of new home foundations, garage conversions, decks, and porches. Piers are usually driven into the ground with hydraulic force or by pounding. They also can be screwed in by hand. When boards are put up on the outside of the pier to hold back dirt during construction, they must be attached securely at both ends, using metal plates on one side and screws through the wood on the other side. (If not securely attached they could fail.)

Roofing materials

Inspection of roof covering is important since a leaky roof is a chronic problem. If the roof does not leak, it probably will last as long as the structural elements of the house. To assess any deterioration of this element, look for missing or cracked shingles and broken or curling tabs that allow water to enter under shingles. Examine the surface of the sheathing directly below the ridges of the roof first because the damage is more likely here than anywhere else on a sloping roof. Look at all flashings around skylights and dormers, especially those areas where two different materials come together such as brick and metal flashing.

Gutters

Keep gutters clean so they can do their job effectively carrying rainwater away from your home’s foundation through a downspout. If gutters get clogged with leaves and debris, water backs up behind them and overflows, carrying muck from the roof into flowerbeds or onto your patio below. Gutters that are full of holes will allow the same result.

Exterior siding

Examine closely what condition your siding is in because this is a major exterior element of the house. A large number of defects could indicate a larger problem with the integrity of the exterior sheathing. Look for broken or missing pieces, blisters, buckles on wood sidings, check if nails on vinyl sidings are loose or missing. Check paint color on metal sidings to make sure they match the original color scheme on your house.

Let Us Show You More About Your Home Inspection at Bell Shah Law

When it comes time to have your home inspected, make sure you know what it will cover. These are only a few items to expect on your home inspection report. Call us now at Bell Shah Law to learn the rest!

What Goes Into a Remote Closing and Could It Help You?

What Goes Into a Remote Closing and Could It Help You?

When unable to attend an in-person for the purpose of buying a home, you can carry out the entire process from any location on the planet. Thanks to recent technological advances used to conduct virtual meetings, such as Zoom and Skype, and DocuSign for securely transferring critical documents, doing a remote closing is easier than ever.

You Can Do All In-Person Procedures Remotely

Traditional closings call for many moving pieces, including:

  • Notarized copies of all documents from the builders or title company’s office
  • Purchasing information about the home
  • Appraisals and home inspection documentation

After completing the closing, the courthouse must receive copies of all contractual data. Handling these activities remotely requires some extra time and energy. However, it’s extremely helpful for those whose schedules don’t permit in-person transactions. Many buyers today already carry out remote closings.

You Can Also Do Remote Notarizations, Document Signings, and Payments

Most documents for real estate deals require notarization. However, you can handle notarizations without having to hold in-person meetings. For instance, in a virtual meeting via Zoom, individuals can show ID to a notary, who can then scan and fax the documents with the appropriate signature. You can also handle virtual conferences in conjunction with services like DocuSign. They offer options like eSignature, which is a system for signing documents electronically on various devices.

Where a traditional closing may require a cashier’s check or certified funds, virtual closings often use wire transfers. The technological advances of recent decades now allow almost all such business transactions to be accomplished virtually. However, it’s important to consult the professionals involved in a given case to fully understand how to complete a virtual closing.

For More Help with Remote Closings, Contact Bell & Shah Law Today

For top-notch help in carrying out a remote closing, contact Bell & Shaw Law, LLC today. We will have you discuss your situation with one of our knowledgeable real estate lawyers, who can assist you with completing all stages of the process.

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